Mets’ deal off with investor David Einhorn

By HOWIE RUMBERG -
Associated Press -
Thursday, September 1, 2011

NEW YORK (AP) - The owners of the New York Mets thought they had found their white knight. After months of what appeared to be friendly negotiations with a potential minority owner, though, the cash-strapped organization is left still looking for help.

The team said Thursday that the sale of a stake in the Mets to hedge fund manager David Einhorn for $200 million has fallen through, denying the flagging franchise the money needed to repay a loan from Major League Baseball and bolster its operating capital.

Mets owners will now try to sell shares of up to $20 million to family members and other potential investors without risking the possibility of losing a controlling interest in the team, according to a person familiar with the club’s plans. The person spoke to The Associated Press on condition of anonymity because the negotiations were not public.

In a statement, the Mets‘ ownership group, led by Fred Wilpon, said it has “provided additional capital to cover all 2011 losses and is moving forward with the necessary resources to continue to operate the franchise.”

“We are very confident in the team’s plans _ both off and on the field,” Wilpon said. “We will engage with other individuals, some who have been previously vetted by Major League Baseball, along with other interested parties, regarding a potential minority investment into the franchise.”

The Mets announced they were looking for a minority owner after Wilpon, team president Saul Katz and chief operating officer Jeff Wilpon, embroiled in the Bernard Madoff ponzi scheme, were sued for $1 billion by the court-appointed trustee, Irving Picard, who has been charged with recovering losses for victims of the scam. A federal trial has been set for March 5.

Einhorn was selected from a group evaluated by Major League Baseball in May and the 42-year-old president of Greenlight Capital Inc. became a smiling presence at Citi Field as recently as Tuesday.

The deterioration of the deal he once called a win-win for both parties surprised Einhorn. He said Thursday that he believed the transaction was on track as recently as last week. Several modifications made last weekend, however, troubled him.

One example that Einhorn agreed to discuss because it had been leaked to the media was a clause he wanted that would provide assured approval of his being made majority owner by the other owners of major league teams if he exercised a right to take over the club in the future.

Einhorn said the Mets told him MLB would have a problem with that clause, so he went to Commissioner Bud Selig. He said Selig told him that MLB would not block a contract with a clause that required the other owners to approve him as majority owner.

But Einhorn said the clause was eliminated from the most recent proposal, and he accused the Mets of lobbying MLB to deny terms in the deal.

“After all, it wouldn’t make sense to invest $200 million into a team and then be denied the ability to exercise a negotiated option down the road due to the inability to obtain the required vote of other major league owners at that time,” Einhorn said.

Baseball transfer rules do not allow automatic or immediate approval for future owners.

Fred Wilpon told Sports Illustrated this season that his team was “bleeding cash” and could lose up to $70 million this year. It was uncertain how further drawing out the search for a cash infusion would affect the club.